Liberty University Online Academy

BMAL 590

Section 8: Decision Analysis

1)A tabular presentation that shows the outcome for each decision alternative under the various states of nature is called a

2. Which of the following would be considered a state of nature for a business firm?

3. A payoff table lists the monetary values for each possible combination of the

mean and median.

4. Which of the following is true?

The process of determining the EMV decision is called the rollback technique. We choose the act that produces the smallest expected opportunity loss (EOL). The EMV decision is always the same as the EOL decision.

All of these choices are true.

5. Which of the following statements is false regarding the expected monetary value (EMV)? To calculate the EMV, the probabilities of the states of nature must be already decided upon. We choose the decision with the largest EMV.

.

6. Which of the following statements is correct?

7. The expected value of perfect information is the same as the

8. The expected value of sample information (EVSI) is the difference between

9. The procedure for revising probabilities based upon additional information is referred to as

10. The difference between expected payoff under certainty and expected value of the best act without certainty is the

11. Assume EVPI= $50,000 and EMV* = $35,000. If perfect information exists, the value of EPPI is     .

12. Which of the following is false?

13. A tabular presentation that shows the outcome for each decision alternative under the various states of nature is called a

14. Which of the following statements is false regarding the expected monetary value (EMV)?

15. In the context of an investment decision, blank                                      is the difference between what the profit for an act is and the potential profit given an optimal decision.

16. The branches in a decision tree are equivalent to
17. Which of the following is not necessary to compute posterior probabilities?